Last week, the Court of Protection’s former senior judge Denzil Lush was reported as saying that he “would never make a Lasting Power of Attorney”. For anyone with an interest in how the finances of vulnerable people are managed, this makes for an arresting headline, so it’s no wonder that many inches of column space have been devoted to what the respected judge’s comments mean for the current system. It has prompted debate about the safeguards under powers of attorney compared with the Court of Protection deputyship regime (which the judge said he would “have greater confidence in” if his own capacity falters).
The BBC published the comments alongside a report of how an unscrupulous neighbour used a power of attorney to steal elderly Frank Willetts’ life savings, and how powerless Frank’s daughter Lesley was to stop the theft. It also comes in the week when former police constable John Gimbert has been convicted of using a power of attorney to steal hundreds of thousands of pounds from his cousin, Janet Trim, who has learning disabilities.
The eminent lawyers who contribute to the Transparency Project have put together an informative long read here which discusses the differences between powers of attorney on one hand, and Court of Protection deputyships on the other.
In this blogpost I am going to raise some extra points about the safeguards in the LPA system. As the Transparency Project explains, there is a tension between providing protection on the one hand, and giving people the right to make their own choices on the other.
The first thing to acknowledge is that the current system is likely to be with us for a considerable time to come, so we need to think of ways to work better with what we’ve got. Planning for a possible future loss of capacity has been possible in England for over 30 years and is also a challenge that very many other countries round the world have grappled with (most of which have some form of ‘durable’ proxy decision-making). In an ideal world, financial abuse would only happen rarely, and on the odd occasion that it was detected, it would be resolved quickly and easily. In practice this would mean having robust safeguards when an LPA is set up, as well as having redress should something go wrong.
Before an LPA is made
The current system is built on the idea that LPAs will only be made by adults who have mental capacity to make their own decisions (‘donors’). As a result, they’re best placed to know who from their friends and family they trust the most. If they appoint more than one person, they can decide if the attorneys act alone, or jointly with someone else. They can also place limits on the powers that their attorney has: for example, forbidding them to sell their home (although sometimes these can cause problems for even an honest attorney in practice).
Another safeguard is the need for the LPA to be registered with the Office of the Public Guardian (OPG) before it can be used. This gives the OPG the ability to investigate if concerns are raised about the attorney’s actions. Of course, this assumes that other people close to the donor will know that an LPA has been made. However it’s no longer compulsory for the donor’s family to be informed that an LPA exists, which means that people like Lesley Willetts might be none the wiser that their relative had set one up. This was one of the changes made when the Mental Capacity Act 2005 overhauled the English and Welsh framework, but was brought in when Parliament recognised that for many people, their nearest relatives may not always be their dearest. While it’s right to allow donors the choice of whether or not their relatives know about their financial arrangements, more could be done to ensure that those making LPAs consciously choose that their family NOT be told when their LPA has been registered (for example, by providing that the closest relatives will be notified unless otherwise stated).
While this kind of provision might have stopped Frank Willett being exploited, it might not have been enough to have prevented Janette Trim from losing her inheritance. This is one of the greatest challenges for our system: it needs to be inclusive (because people with learning disabilities should be entitled to make decisions about their legal and financial affairs like anyone else), but it’s also important that people making LPAs are fully in the picture about how powerful the documents can be. And yet, over the last few years measures by the Ministry of Justice have been steadily eroding the safeguards which were originally included in the Mental Capacity Act 2005 (e.g. reducing the number of ‘Certificate Providers’ who certify that the donor has capacity to make the LPA in some cases), while also promoting LPAs in preference to deputyships, including setting up an online tool which is designed to be used without legal support.
Carol McBride, Head of Private Client
The OPG has even gone as far as suggesting that it should be possible to make LPAs without having a ‘wet signature’, meaning that it could be set up and registered entirely online. However, the majority of respondents to their consultation pointed out the dangers:
‘Online identity checks only evidence that a person exists, not that it is the person applying. Those closest to people (who are responsible for most abuse) are also those who know enough about them to impersonate them for their own gain.’
So how could the English system be improved? Our near neighbours in Scotland can also make powers of attorney, but their system is set up differently, and involves a doctor or lawyer testifying that the ‘granter’ knows what the PoA is, what powers they are giving (and to whom), and that they aren’t under pressure to make it. This usually follows ‘detailed and private’ discussion between the granter and their solicitor which the Scottish Public Guardian has called “a significant protection”.
After the event
As well as improving the protections for LPA makers before the event, it would also be possible to improve the system after the LPA is already set up. One major improvement would be for the donor to be protected by insurance. This isn’t entirely unprecedented, as the Court of Protection insist that security bonds are put in place when they appoint a deputy to manage someone’s finances (typically when an LPA hasn’t been made). As many commentators have pointed out, there is very little hard research on this area of the law, and I’m not aware of any published information from insurance companies on whether they would be prepared to offer this kind of insurance, and if so, on what terms and at how much cost.
A further way of safeguarding donors from financial abuse would be for attorneys to have more information and support on how they are carrying out their roles to help them identify when their actions might be putting them at risk of acting illegally.
As specialist solicitors in this area we’re keenly aware that people’s circumstances are highly individual, so there’s no easy “one size fits all” solution to the problem of financial abuse. Not only can abuse cover a very wide range of situations, it’s equally unclear how often it happens, and not always easy to determine what should happen to put things right. The charity Action on Elder Abuse (AEA) has useful information on what can amount to financial abuse (although of course, it’s not just old age that can make people vulnerable). As AEA acknowledge, people can sometimes find themselves having unintentionally inflicted abuse on a vulnerable person: through being unequipped to deal with their responsibilities, or because of a lack of support. One positive way to make the current system work better would be for attorneys to be encouraged to ask for advice about their loved one’s finances sooner rather than later, and to highlight the role that specialist solicitors can play in advising attorneys what they can and can’t do with the donor’s estate.
The debate sparked by Denzil Lush’s comments suggests that the English LPA system still has some way to go to provide adequate protections. While there’s nothing wrong with the OPG continuing to encourage people of all ages to make LPAs as part of planning for the future, it’s vital that we recognise that the vast majority of donors are people aged 80 and older and to plan the system to have their needs at its heart. Looking critically at how well the current safeguards work in practice would be an excellent start.